For those readers who wonder why I haven’t written about the weekly initial jobless claims, it’s because they haven’t produced any significant news over the last few weeks. The changes have all been within a range that can best be described as statistical noise. When dealing with numbers between 360K-380K, a shift of anything under 7K-8K is only meaningful to the seven or eight thousand people who did or did not have to file for benefits that week. In other words, a statistician would expect to see those kinds of changes in this type of series.
Well, except for the statisticians at NBC, apparently, emphasis mine:
New claims for unemployment benefits took an unexpected jump in the latest week, raising more concerns about the struggling job market and providing futher incentive for the Federal Reserve to jump in and help the economy.
The Labor Department reported Thursday that seasonally-adjusted initial claims rose 4,000 to 372,000. That’s compared to a decline of 1,000 that economists on average had been expecting.
Unexpected? This is a shift of just over 1% in a long series. Yes, it went up rather than down, but the difference is still well under 2%. Nevertheless, the economists at Reuters express the exact same kind of shock, shock over this change:
The number of Americans filing new claims for jobless benefits unexpectedly rose last week, while a separate reading on U.S. manufacturing activity showed a slight improvement in August.
The weaker-than-expected weekly jobless claims suggested the labor market is healing too slowly to make much of a dent in the unemployment rate.
Well, that’s certainly true — and it would have been equally true if the number had declined by 1,000 to 367,000, too. This series would have to get down to the 325K range to reflect substantial hiring and decline in true unemployment, which is evident when one looks at the data in this series for a number of years. That brings us to the Associated Press report, which includes a laughable take on what I call the 400K myth (h/t Steve Eggleston and Kevin Binversie):
The number of people seeking first-time unemployment benefits rose a slight 4,000 last week to a seasonally adjusted 372,000, evidence that the job market’s recovery remains modest and uneven.
The Labor Department said Thursday that the four-week average, a less volatile measure, increased 3,750 to 368,000.
Applications are a measure of the pace of layoffs. When they fall consistently below 375,000, it generally suggests hiring is strong enough to lower the unemployment rate.
This is just nonsense on stilts. We’ve been at the 375K range for more than a year now, both below and slightly above that mark. Has the unemployment rate been significantly lowered? Is it going down or up? And has the civilian participation rate gone up or down over that period? Christopher Rugaber usually does better work than this, but this is a big step backward in analytical credibility.
Let’s make this clear: the news today on the weekly initial jobless claims is that it’s not news, not good news or bad news. It’s a one-week bit of statistical noise, meaningless in determining direction of employment or the economy. For people who think it means something …